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Venture Capitalists and Angel Investors

Longtime VC Bob Pavey said in a recent article that the venture capital community needs to not only coexist with Angel investors but to embrace and encourage their activity.

Recently, there's been some tension between so-called Super Angels and the venture capital community over the competition for hot early stage deal activity.

Pavey says that Angel investors fill a critical funding gap between the "friends and family" money - typically sub-$100,000 and the $1 million or above territory of institutional venture capital.

In spite of the lower cost of starting some types of technology companies, entrepreneurs simply cannot get to institutional venture capital unless they have achieved a certain set of milestones. Angel investment facilitates that achievement.

Pavey goes so far as to say that Angel investor capital gains taxes should be lowered for investments in very young, pre-revenue companies.